1)A bond that matures in 6 years sells for $950. The bond has a face value of $1,000 and a 5.5% annual coupon. What is the bond's current yield?

a. 5.79%

b. 5.50%

c. 6.25%

d. 6.00%

e. 6.50%

2)

Delta Corporation has a bond issue outstanding with an annual coupon rate of 7% and 20 years remaining until maturity. The par value of the bond is $1,000 and present market conditions justify a 14% nominal annual required rate of return. What is the bond's current yield?

a. 13.05%

b. 14.50%

c. 13.75%

d. 14.00%

e. 12.20%

3)

Of the following, identify the CORRECT statement.

a. A discount bond's price increases each year until it matures, when its value equals its par value.

b. A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

c. If a bond sells at par, then its current yield will be less than its yield to maturity.

d. A discount bond's price declines each year until it matures, when its value equals its par value.

e. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yield and a higher capital gains yield than the par bond.

4)

Hooper Printing, Inc. has a bond issue outstanding with 14 years left to maturity. The bond issue has a 7% annual coupon rate and a par value of $1,000, but due to changes in interest rates, each bond's value has fallen to $749.04. The capital gains yield earned by investors over the last year was 25.10%. What is the expected current yield for the next year on this bond issue?

a. 10.00%

b. 8.75%

c. 10.50%

d. 8.24%

e. 9.35%